Skills Shortage in Construction
The skills shortage is getting worse, with 83% of HR professionals saying that they had difficulty recruiting suitable candidates in the past 12 months, according to new research from the Society for Human Resource Management (SHRM). There has also been a noticeable decline in the quality of candidates available overall, with one-third of managers citing a lack of needed technical skills.
Carpentry, plumbing, welding and machining are the technical abilities most lacking. While expanding advertising and outsourcing recruiting are among the most common tactics used by employers to address the problem, onsite training, starting or expanding training programs to help improve the skills of new hires, providing offsite training for employees and increasing compensation are viewed as the most effective.
Other more long-term remedies include collaborating with educational institutions and recruiting from nontraditional sources, including people with criminal backgrounds and military veterans. More than one-quarter of respondents said that their businesses are collaborating with schools to build a pipeline of job candidates, but most say that educational institutions have done very little to address the issue.
More than three-quarters of respondents said that foreign-born workers contribute positively to economic growth and help drive innovation, but one-third said they were challenged by an insufficient number of employment-based visas, and also said that the employment-based immigration process was lengthy and complex with unpredictable results. HR professionals also called for removing roadblocks to ensuring a legal workforce, with 81% supporting a national, entirely electronic system that accurately confirms identity for employment and combats identity theft.
What Homebuyers Want
The latest survey from NAHB ranked 175 features based on how essential they are to the home purchasing decision. The survey results were released at the International Builders’ Show in Las Vegas in February.
The top ten features include laundry rooms, a variety of energy-saving features including Energy Star appliances, home storage, garage storage, walk-in pantries, hardwood flooring, a patio and exterior lighting.
Average home size continues to decline, dropping from a peak of 2,689 square feet in 2015 to 2,576 square feet in 2018, according to the US Census Bureau. Some of the decline is due to an increase in townhouse production, which comprised 14% of home starts in 2018. A location in the suburbs is desired by 64% of buyers, followed by a rural setting (24%) and central city (11%). Millennials are the most likely to want a central city location (23%) compared to Gen X (11%), baby boomers (8%) or seniors (3%).
As far as space design goes, 86% of buyers prefer the kitchen and dining room to be completely or partially open. Top finishes include stainless steel appliances (67%), granite or natural stone kitchen countertops (57%) and white kitchen cabinetry (32%). White on white and grey on white are new trends emerging for both kitchens and baths. Other rising trends include farmhouse styles with lots of wood; engineered quartz countertops, vinyl and resilient flooring for aging in place, wireless controls and higher-end fixtures in bathrooms.
Wells Fargo Housing 2019 Forecast
The housing market lost momentum in 2018, with affordability issues and rising mortgage rates depressing sales, and hawkish comments from the Fed sending many buyers to the sidelines. Weather and natural disasters added to the woes. Wells Fargo revised their forecast for GDP growth to 2.6% compared to their earlier forecast of 2.7%, and still expects the Fed to raise rates twice this year. But they expect the first increase to be delayed to June, with the second not coming until December. They believe current sentiment in the economy and housing market is too pessimistic because the economy's underlying fundamentals remain sound. The strength in job growth has corresponded to an increase in household formation, which is essential to improve demand for homes and apartments. Wells Fargo expects modest improvement in new and existing home sales this year, with moderating prices and the pullback in mortgage rates reviving demand. They expect new home sales to rise 1.6% and existing home sales to rise 0.6%, with most of the improvement in sales occurring at lower price points.
Digital Ad Spending Grows
2019 will be a milestone year for advertising, with digital ad spending in the US exceeding traditional ad spending for the first time, according to eMarketer’s latest forecast. Total digital ad spend will grow 19% to $129.34 billion this year, representing 54.2% of estimated total ad spend. By 2023, digital will account for more than two-thirds of total media spending. The biggest player is Amazon, whose US ad business will grow more than 50% this year, pushing its share of the digital market to 8.8%. The biggest decline in traditional spending comes from directories, such as the Yellow Pages, followed by traditional print, where spending will drop nearly 18%.
Global Powers in Retailing
The 22nd edition of Deloitte’s Global Powers of Retailing report analyzes how the 250 biggest retailers performed in 2017. Walmart is ranked number one globally, with a global revenue of US$500 billion, nearly four times the size of closest rival Costco. Amazon moved up from number 10 in 2016 to number four. The Home Deport moved up to number 9 and broke $100 billion in sales. Deloitte also presented the Fastest 50, a ranking of retailers who showed the greatest sales growth from 2012 to 2017. Amazon held the top spot, with US firm Wayfair also making the list.
Shoppers expect pricing consistency across all channels, but in actuality prices in store and online can vary, as pricing algorithms generate different prices based on factors that could include time of day, demand, location, competition and customer buying patterns. Amazon has blazed the trail, with algorithms that reportedly change prices millions of times per day depending on demand. Prices for items can change even after the customer has added them to the cart, as Amazon can lower prices to match any price offered by another retailer. Vendors who work with retail brands on pricing strategies, including Engage3, Profectus and Revtrax, say the industry’s major players are experimenting with dynamic pricing to keep up with Amazon. Analysts caution that customers may revolt when they discover that the same item from the same retailer can be priced differently, causing what is termed decision paralysis. People do nothing, waiting to see if they’ll be offered a better deal. There are also several states that have enacted laws prohibiting differential pricing. In addition, the brand may damage customer perception. Or as one analyst commented, “Being technologically feasible doesn’t mean something is socially desirable. It works well if no one knows you’re doing it. Once someone finds out, it creates a storm.”
Online Sales Forecast
Amazon will continue to dominate the US ecommerce market, with their ecommerce business growing 20.4% this year to $282.52 billion, or 47% of ecommerce sales and 5% of the total US retail market. Walmart’s ecommerce sales are expected to grow nearly 33% this year to $27.81 billion, giving the world’s largest retailer a 4.6% share of the US ecommerce market and a third-place ranking behind Amazon and eBay. The Home Depot is in fifth place, with 1.7% of online sales.
New Packaging Options Create Recycling Problems
Amazon has switched to lightweight plastic mailers from cardboard boxes for many items. However, waste experts note that the new plastic sacks are not recyclable in curbside bins, so suffer from the same problem as plastic bags. The huge holiday season created a massive “hangover” of packaging waste. Amazon was responsible for half of all online transaction in 2018 and is by far the biggest shipper and producer of waste. Target and many other online retailers have also switched to similar plastic mailers. Plastic mailers do take up less space on trucks, which means that it requires less energy to deliver them, but recycling issues and stricter laws in China, where much of America’s recycling ends up, mean that the inclusion of plastic mailers in recycling bundles often means the whole bundle ends up in the landfill after all. Only 4% of the plastics from US households are recycled through collection programs at grocery and big-box stores; the other 96% ends up in landfills. In some countries, including Canada, companies pay fees based on how much waste their packaging and products contribute to the environment.
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